Presco Fresco!

A story about Snakes and Ladders

Tom arrives at the office at 7:45AM, five days a week, Monday though Friday. Tom leaves the office between 6:00PM and 7:00PM, five days a week. On Saturdays Tom comes to the office at 10:00AM and works until 2:00PM, every Saturday, that is unless Michigan State is playing at home. He always attends Michigan State home games – football and basketball, rain, shine, snow, or the end of the world because it would be the end of his world if he missed even one. On Sundays Tom rests. He starts and ends meetings on time, he believes that you have to walk the walk not just talk the talk. Tom is a Managing Director. He firmly believes that as a leader he must lead from the front, by example. He believes dedication and being punctual entitles him to expect the same from his executive team. He believes his good work habits will be noticed up the organization chart and down the organization chart. His current assignment is to oversee four regional offices; San Francisco, Denver, Atlanta and Newark. As a personal organizing principal, Tom puts great store in the idea that good work habits and good systems beget success.

It’s Wednesday noon (East Lansing Michigan time) and Tom pulls up Face Time (video conferencing) on his computer to call Marianna. That’s Marianna Abruzzo his regional director in Denver. The ring tone chirps, chirps, chirps, eight, nine, ten chirps. Tom’s fingers drum the desk top, “come on, come on, its not lunch time yet” he says to the chirping screen. Finally he smacks the track pad which kills the FaceTime window and reaches for his cellphone. He’ll call her directly. After three rings he is dumped into voicemail. He punches the red disconnect button and angrily fingers a text that reads: “Call me”. Five minutes pass. No Marianna. He calls the Denver office number. After ring-around-the-rosie on that goddamn automated system he finally hears a live voice. “Hello this is Jim, I’m the office manager, how can I help you?”

“Where is Marianna?”

“I beg your pardon?”

“Where’s your boss, Marianna?”

“Who’s calling please?”

Tom tells the young man in an edgy, slightly threatening tone that he is the Managing Director, Marianna’s boss, and that he wants to talk to her.

‘I’m sorry but she must have stepped away from her desk for the moment. Can I take a message?”

“Yes you can, tell her I called and ask her to call me as soon as she returns, can you do that?”

Tom makes a mental note to make a written note about this frustrating episode and angrily punches the red “end this call” button. Instant communication systems and devices costing shareholders millions of dollars and he can’t reach Marianna at 11:00AM on a regular work day. What the heck is going on? Not good enough, not good enough by half.

Tom went to business school at Michigan State. His diploma hangs on the wall in his office. Someone sitting in one of Tom’s visitors’ chairs (or viewing him through the video camera on his computer) couldn’t miss seeing it hung, as it is on a perfect sightline just above his head. Thomas Bartlett MBA, Eli Broad College of Business. Of all the things he learned in B School he says, the biggest game changer was the world of systems, particularly as they relate to people and organizations. Tom learned how systems, carefully designed and applied could/would make the world a better more predictable and therefore productive place. Not only did this body of work support Tom’s sense of orderliness, but Systems, with a capital “S” could cut through the chaos of what Tom saw as uncontrolled human behavior. In the hands of a professional, systems, applied and measured, held the promise of taming or at least minimizing the unpredictable (read dangerous) proclivities of human activity in business organizations. Since graduating from Eli Broad College of Business, Tom developed a systems practice, based on a kind of philosophical system whose main benefit would be to survive the chaos of people in business through the use of careful planning and inducements. You can systemize right actions, you can plan for and incentivize good behavior and as a result you can count on reliable (good) outcomes. For Tom, this was comforting, to the point of obsession – thank you Eli Broad, Thank you Michigan State! See a problem, create a system; create a roadmap of incentives and deterrents and Presco-Fresco, everyone does what they are supposed to do. That’s how Tom saw it. Ten years on with lots of systems practice, Tom carried himself like a kind of systems ninja. His frustration with not being able to reach Marianna (and other senior executives reporting to him) was yet another opportunity to dampen randomness and uncertainty in his organization.

Step one: craft a specific Connectivity Policy. After all, this company provides top-end iPhones for each of its regional leaders, and there is an obvious quid pro quo. Tom swells with justification as he begins typing a first draft that reads:

“Your iPhone is a remarkable executive tool. We have provided it to you in order to ensure convenient connectedness throughout the work day. Specifically, you are expected to be available by voice, or IM from 7AM until 9PM each work day and from 9AM to 5PM on weekends. Vacations are not considered work days or week ends unless otherwise designated by your supervisor.”

Next comes the incentive part. Philosophically, Tom sees himself as an apostolic economist – not just an educated enthusiast, but an experienced practitioner of economic principles. His reading and observing have led him to believe that the most important aspects of human behavior are fully considered in two primary sources: Adam Smith “The Wealth of Nations” and the modern treasury of Freakonomics books, blog entries and podcasts. To Tom, Adam Smith and Freakonomics has everything one needs to know about the science of human behavior. In summary, Tom’s creed reads like this: The one true way to control human activity is to create incentives that guide right actions. And since they don’t call it economics for nothing, the most perfect incentive is money… do good and you get more, do bad and you get less. ‘Presto Fresco’, everybody does good, and in this case, heightened availability is achieved and the organization is more efficient. Thank you Adam Smith and Freakonomics! No messy collaboration, time wasting meetings, deep listening, brainstorming, none of that fuzzy stuff. And most importantly, no more having to wait to talk to regional managers! Presto Fresco!

P r e s c o… f r e s c o, that’s what Tom’s Italian grandfather used to say when something turned out well. “Oh hay Tommso! Presto-Fresco ma boy! Da Dodgers won the World Series!” Like that. Presto Fresco is as good as it gets, so to speak.

In this case, the Presto-Fresco incentive was simple and aimed directly at the wallet. Each executive starts the year with a $3,000.00 “connectedness bonus credit”. Say one team member calls another on the iPhone. He/she either gets voicemail or talks to their teammate. If sent to voice mail the protocol is to leave a message – or to send a text which starts a 60 minute clock running. The call recipient has sixty minutes to text or return the call. If a response wasn’t forthcoming (60 minutes) the offending regional manager’s connectedness bonus is docked $250.00. At year end the executive would receive whatever was left in the bonus account. In rare cases where the bonus had gone negative due to a surfeit of unresponsive events, the deficient executive’s year end pay is of course docked in an amount equal to the deficit. Presto-Fresco!

The “Connected Bonus Credit” program was enshrined by HR, added to an already impressive list of systems and incentive schemes, fifteen of them and counting. This was an intricate collection of devices, almost like a treasure hunt of rewards and punishments that gave proof that “Tom was here” as the Managing Director, North American operations. All of his direct reports, especially the regional leaders, learned quickly that the way to get along in Tom’s world was to learn how to navigate the Incentive System better known informally as Snakes and Ladders after the board game of the same name.

Then one day, after three years on the job, Tom was promoted to another division. Tom’s boss chose his successor, and, to no one’s surprise, it was Marianna. Unlike so many big corporate promotions, she was a popular choice among both subordinates and the regional directors. As the transition unfolded and Tom moved out, Marianna hit the ground running. First she relocated the center of North American operations to her office in Denver, found a successor for her vacated regional director role, and then took off for the grand tour, visiting eighteen offices in Canada and the United States. She was curious, inquisitive and a good listener. After a month of hand shaking, talking, assessing and strategic conversations, she was ready. It was time to formulate and direct some changes. Ground zero, as her four regional directors were calling it, was to be the venue for the North American Executive Team meeting, a mountain lodge in Aspen Co. Upon arrival, they were greeted by a majestic mountain landscape sprouting springtime green, retreating snowcaps and clouds racing across a blue sky above the mountains that dominated the scene.

It was 8:15AM, day one at ground zero. Marianna sits at the head of a midsize conference table, a wall of glass on one side and landscapes, painted in oil, framed and hung on the wall opposite. The wall with paintings is covered in beige rough textured silk, each painted scene softly illuminated by an invisible light source. These are not a matched set of landscapes; their pedigree from several different artists, each painting masterfully framed in rough weathered board cut and finely joined. Ground zero is actually called the cowboy room. To Marianna’s left, sits Tom and Archie, to her right, Janette and Belinda. The first fifteen minutes is an exchange of introductions, greetings and personal updates. This is the first time the team has met in person. Belinda is Marianna’s replacement as regional director, so she is new to the team and Archie had just become a regional director two months ago, so he too was as good as new. There were stories told about teenage children driving, partners getting new jobs, losing old jobs, being promoted, aging parents, church activities, PTA participation, vacations taken, life as lived in four different parts of North America. This opening time brings everybody into the room, and settles the nerves some, setting the stage for other conversations.

Marianne produces an agenda. It is a single sheet of paper with “First North American Directors Meeting” printed in bold letters at the top.

Then a large white space followed by these three lines centered on the mostly empty page:

Success

Roles, Responsibilities, Resources

Compensation

And at the bottom of the page in smaller black print:

Two days.

“Wow’” says Tom, “Minimalism. Is this it?

“Yes it is, and thanks for noticing” says Marianne smiling. “Any questions about the agenda?”

“No”

“No not me”

“Um, no”

“Sorry.”

“Belinda, question?”

“Sorry Marianne but for some reason this makes me more nervous, a little like those job interviews when they spill a glass in your lap and then watch your behavior?”

They all laugh, a little nervously, even Marianne.

“No spilling water, no exploding rubber ducks, nothing like that.”

“Well the other thing that makes me nervous is we are here for two days and well – three sentences? You know?”

“I do know. Anyone else, other thoughts about the agenda?”

The four are still and silent, looking at her.

“Okay, here’s the deal:” She holds up the single sheet. “I think this is all the agenda we need, and I know we have a lot to talk about. One of the reasons for the white space is to allow for other issues to be added as we uncover them. But just so you know, if we sort out these three things at this meeting, we will have done a lot of good work. My aim is to lay down a strong foundation for our team, our work together, and for our combined North American Operations. The raw materials for that foundation are all on this page.”

“Well that makes me feel a little better,” says Belinda. “As long as you promise to give us some warning about what is expected of us, that’s what feels uncomfortable.”

“Yes, I can see that.”

“I’m fine with it,” says Tom. “You’ve always been square shooter with me! Oops, maybe that isn’t the best way to say it – sorry Belinda.”

Everyone laughs.

“All right… here we go….”

And so the conversation, the real conversation begins. The group explores the idea of team success and enterprise success. By the time they break for lunch, they’ve forged a strong agreement about what to tell others in the business about success and how to judge their efforts. After lunch they begin, this time hashing out rules for team engagement, behavior, team values, and budgets. This work is suspended at 6PM. They agree on where to pick up the conversation in the morning and adjourn for dinner. Marianne emphasizes that dinner is a social event, and so it is. After a day of shop talk, dinner unfolds as a no-shop-talk- zone.

By noon on day two, they have co-written a group charter for the team going forward, thus completing two of three items on the agenda. The sun is shining outside, the temperature is reported by Siri on Marianne’s iPhone as 73 degrees with no wind.

“Lets all get some fresh air. I will have lunch served out on the patio and then we can take a walk. I don’t think we have to be back here until say 2:30, how’s that?”

“Heavens yes” said Belinda.

“Just one question,” it was Archie. “Will that give us enough time to get through the compensation part?”

“I think so, in fact I suspect we’ll be done early.”

“Really?” Archie looked puzzled.

“Yes, really, is there something worrying you, Archie?”

“Oh, well I’m not worried exactly but, well sort of worried, you know our compensation, the snakes and ladders, its always been such a big deal and I just want to be sure we have enough time to figure out how it’s going to work this time.”

“Got it, thanks,” says Marianne. “If that is your main worry, I am sure we will be done early.” She looked directly at Archie and smiled, then at Belinda, then Janet, then at Tom. “Good, let’s eat and enjoy the sun shall we?”

At 2:30 PM Ground Zero, AKA The Cowboy Room, Marianne’s team is back at it. Janet sighs, “Thanks for the break, I thought my head would split apart this morning. Writing the charter was a real push for me.” The others nod heads and exchange smiles. “The fresh air and exercise was perfect, I think I’m ready to tackle Snakes and Ladders, well not alone of course, but I’m ready.”

“Good,” says Marianne, and since you’re feeling energized I have a question for you, you first Janet, and then for each of you in turn. Give me two words or phrases to describe your experience with Snakes and Ladders”

“Oh Gosh”, says Janet. “Umm: okay, Las Vegas, Anxiety”

“Archie?”

“Well I’ve only heard about Snakes and Ladders, but I have played a version of the compensation game in other parts of the company so I will say: “Place your bets” and “Care Bear”.

“Care Bear” says Janet. “What does that mean?”

“It means; I care about stuff but getting the bonuses is more like looking for my teddy bear than about anything else. You want me to look for my teddy, and I will look for my teddy and you will pay me for it so… Care Bear”.

Belinda says, “Pop goes the weasel and The Gumball Machine. I do want my big juicy gum ball but you never know really, do this then that and pop goes the weasel, surprise and then the gum ball machine rewards me. I want the money for sure but the whole thing feels silly and manipulative.”

Tom sits nibbling at his lower lip, shaking his head slowly distractedly, takes a deep breath then says “Dial for Dollars, and Survivor. Money, yes and you better do pretty well at snakes and ladders or you won’t survive around here, you’ll be voted off the island, that’s what I think.”

Marianne had been taking notes, looked up and smiles, looking left then right, looking at her journal and then says: “Oh Gosh, aren’t we smart! We have devised a maniacally complicated system, paid lots of money to install this system only to have it called Snakes and Ladders, and in its current state, this variable compensation bonus system’s highest accolade is Presco Fresco. I mean listen to what you’ve said:

Las Vegas, Anxiety

Place your bets, Care Bear

Pop goes the weasel, The gumboil machine

Dial for Dollars, Survivor.

Wow!

Okay, since I’m in charge of Snakes and Ladders for the coming cycle and have had the dubious pleasure of playing Snakes and Ladders myself, I’ll add just one word – Crap! Our Presco Fresco Snakes and Ladders variable compensation system is just that; its crap! Can anyone on this team give me a good reason to continue with the Snakes and Ladders?”

Tom says “Well, I like being paid money and a big part of my pay is determined by the system.”

“Yes, I know, but stay with me here… my question is what – other than pay – are you getting from the system?”

Tom sits straighter and says; “nothing, but this conversation makes me really uncomfortable. You see I do want to be paid. Actually, what I mean is: I don’t want to take a pay cut if I can avoid it, frankly… if I may be so bold as to say so.”

“Good for you, Tom, yes, I get it. I am not talking about you taking a pay cut, I am only asking about the system, the game.”

“Well in that case, no, I hate the stupid game, it feels like it does the opposite of its purpose, it pisses me off, it doesn’t make me a better leader or employee, I’m sure of that.”

And so began the conversation about the last item of business on their agenda. In the course of fifteen minutes Snakes and Ladders was disassembled. Fourteen of fifteen Presco Fresco initiatives were summarily retired. Marianne adjusted salaries to the previous year’s net level so no one was penalized by the game’s demise. In the end, only one of the fifteen variable compensation elements was left intact; profit-sharing contributions to 401K. If the division made profits, everyone was granted a proportional bonus contribution. Item three on the agenda, Compensation, was completed at 3:13PM at Ground Zero. The mountain light was turning yellow, the temperature according to Siri had fallen to 68 degrees outside. Marianne gave this closing message to her newly formed team:

“Well, we did it! We finished the whole agenda. Gosh we just crushed it, good work! Thank you so much for all of your effort. These two days at Ground Zero gives us plenty to do in the coming year, that’s for sure. And we’ve built a strong foundation for our team. We all will be earning a predictable executive salary, and we all may receive a profit sharing bonus if the enterprise is successful. You may recall that Snakes and Ladders was initially set up to ensure – maybe micro manage is a better word – our behavior as executives. Starting today Snakes and Ladders is gone and as is the idea that we need to be paid extra or incentivized to do our basic work as executives, leaders and team members. From now on you and I together will discuss our work, our obligations to do good work, to grow, and how to act as good team members. We will measure progress, we will answer our phones when possible, we will respond promptly to each others needs, we will even attend our training courses because they are a basic part of our executive development. We will do these snakes and ladder types of things because we are being paid fairly to do them and because we want to grow individually, as a team and as a business unit. So, for example when you think about showing up on time for meetings, see that it is the right thing to do, and that you don’t need a slot machine to compensate or punish you in order to do good work. We will “just do it”, how about that? And if we don’t or if we fall down, we’ll talk about it, and get back on track. Presco Fresco! Dinner is at at 6:30, and the no-shop-talk rule will be in force.”

Marianne’s team clapped, applauding each other, shook hands all around and paraded out of The Cowboy Room into the coming year and its many challenges. Marianne would call Tom next week and tell him about the change in the team charter and to thank him for handing over a solid organization. She didn’t want him to be ambushed by rumors of his system being dismantled so she explained it to him herself. She wasn’t sure he would understand, but at least he wouldn’t be disrespected.